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A notable French medical researcher recently conducted an experiment with the drug Viagra on twelve men, who were helicoptered to one of France’s highest peaks. No women were present.
By itself, Viagra (the brand name for the chemical compound known as sildenafil) isn’t a psychotropic drug, which spurs the brain to sexual arousal. Instead, it is a vasodilator, which stimulates the heart and the circulatory system, so that blood flow is increased around the body. By putting 12 men at an altitude of 4,362 metres, exercising them hard on bicycles and other machines, but keeping them away from women, and hiding the identity of the pills they were taking, the French doctors were trying to determine whether Viagra may open the gate to stopping pulmonary oedemas, and other serious circulatory disorders. The results aren’t in yet.
When it comes to stimulating the flow of investment into Russia’s hardened arteries, Maurice “Hank” Greenberg, president of the world’s largest insurance company, American International Group (AIG), recently announced that he has found the Viagra equivalent.

Russian arousal
Like the Pfizer pharmaceutical company, which sells Viagra, Greenberg and AIG say they intend to make as much money as they can from branding their name to an expensive form of Russian arousal they are inviting investors to purchase.
What is odd about the Greenberg experiment is that, in contrast to the French alpine one, there is no evidence that Greenberg’s earlier attempts at achieving the same effect were successful. What is doubly odd is that to improve on the scientific evidence, Greenberg recently announced in Moscow that he has chosen Vladimir Potanin and his Interros holding
as his partners. If Viagra occasionally needs La Cicciolina and other movie stars to work its effect, AIG’s press coverage in Moscow suggest that Greenberg needs Potanin to make money out of Russia. Interros’s press releases, on the other hand, suggest that Potanin is looking to Greenberg to give his business empire more uprightness.

Investment funds
According to the promotional press, two investment funds are to be created by AIG, one for buying private equity and one for real estate. The first is proposed to collect and then disburse $300mn in Russia and throughout the former Soviet Union. Less has been said about the second, which may have up to $250mn to invest; but then, if no one contributes, then it will have nothing. And there’s the rub. Apart from the arousal of the AIG brand-name, what exactly do these funds have to offer, and who will put money into them?
Greenberg will subscribe $50mn of AIG cash into the private equity fund. Potanin will add another $50mn from Interros’s assets, which include Norilsk Nickel, the world’s largest nickel and palladium miner; Agros, an agro-industrial group; Rosbank, successor to the bankrupt Uneximbank; and Soglasiye, an insurance company that mostly services the needs of the larger group.
An AIG man has been placed on the board of Soglasiye to keep an eye out. According to Andrei Bugrov, deputy director of Interros and one of the directors of the new funds, Interros will bring to the venture “its expertise in business acquisition, restructuring, and exit strategies.”
This is bound to come in handy, because some analysts claim that AIG has attempted more than one investment fund in Russia in the past few years, and these, they say, have done poorly. AIG executives, who have been asked to respond, and the fund managers, won’t give details.
Ivan Rodionov, who is the executive director of AIG’s fund management firm in Moscow, was voluble about the new funds during Greenberg’s visit, but cautious about the cash AIG is actually intending to put into the venture. Despite a Moscow Times headline, claiming $500mn in new funds, Rodionov was quoted as saying “we are talking about commitments here, not cash provided by AIG under a deal with Interros.” What Rodionov didn’t tell the Moscow Times, a Potanin newspaper, and didn’t want to admit when I asked him, was that Greenberg may not be adding any new money of his own at all. Instead, the indications from AIG sources is that AIG is shifting old fund money into a new bottle or two – perhaps less of it than was at risk before.
Rodionov did not want to confirm the names and amounts of the funds he’s been managing. Nor did he want to get into detail about the partner AIG has identified in its Russia Growth Fund. That partner, Platon Lebedev, co-controlling shareholder of the Yukos oil company and the Menatep group, is almost as defunct as the fund, as he sits in a Moscow prison on charges of massive embezzlement and fraud.

Uninhibited Hank
Greenberg didn’t feel inhibited when he spoke to reporters in Moscow, ahead of his meeting with President Vladimir Putin, and just before the announcement of the new ventures with Potanin. According to one version of what Greenberg said, he claimed to have invested $300mn in Russia in recent years. According to other reports, the figure mentioned was $30mn. When AIG offices were asked in Moscow, London, and New York, where Greenberg has his headquarters, to say which figure is the correct one, all replied they did not know. A New York executive went so far as to say that Peter Yu, Head of AIG Capital Partners, is “the person best positioned to respond”. But it was also said, “he is traveling outside the US and cannot be reached at present”.

If Greenberg wanted to show that he has transferred his confidence from Lebedev to Potanin, from Yukos to Interros, his subordinates have been reticent to explain what they know about Potanin’s record of what Bugrov termed his skills of business acquisition, restructuring, and exit.
Yu was asked to say if he was familiar with Interros’s acquisition of the shareholding of Norilsk Nickel and of the Krasnoyarsk Precious Metals Plant; the Norimet restructuring; the takeover of the Tagansky Meat Combine in Moscow; or the exit strategy of Uneximbank after the 1998 rouble collapse. All controversial
business skills, and all of them challenged as illegal, butYu declined to respond. The silence is resounding, because new US anti-money laundering regulations make it difficult for US company boards, like AIG’s, to certify that their investments in Russia will not violate the law.

Worth the risk…
Some investment analysts in Moscow claim that because they don’t trust Potanin, and AIG’s experience in managing investment funds in Moscow is weak, the two gain from becoming partners. But even if Greenberg hasn’t risked new cash by picking Potanin, he has decided it’s worth the risk to the AIG brand-name to join forces. “Do I trust Potanin? No,” says a well-heeled western investment banker in Moscow. “But if AIG puts its own money into the fund, I can trust such a fund.”
According to an Interros source, Greenberg and Potanin have agreed that their private equity fund of $300mn -$200mn of that, other people’s money -will be spent on taking stakes primarily
“in projects related to retail business, such as supermarkets, cinemas, and drug store chains; in every sector, which is not connected with the sectors where Interros is present already, such as banking, miningand metallurgy, energy machinery construction, and mass media. Each of the projects in which the funds will invest, will consume not more than 20% of the means of the fund.”
This looks prudent, especially as Greenberg has proposed a structure that should prevent Potanin from quietly cashing out some of his stakes through AIG’s pocket. Still, when asked by a Russian reporter whether Interros will remain a Potanin company, the oligarch hinted that he’s looking to cash out by letting others buy in.
If Greenberg wants to play Potanin’s godfather, now that he has come down from the Moscow summit, he has the opportunity to say so. As the French researchers recently learned from their high-altitude Viagra tests, there’s no telling what good can come of rebranding a well-tried remedy.

A Noble response
12 August 2003
Dear Mr Hastie
I am writing with regard to an article which appeared in the July issue of The Insurance Insider which has just been drawn to my attention.The article was about my brother, Sir lain Noble, and appeared in The Marcus Scriven Profile.
As a journalist yourself, I am sure you will be well aware of the old maxim that one should never believe anything one reads in a newspaper article.The article inTheTimes, which was the basis of your story about my brother, is a case in point.As we pointed out to the editor of The Times, there never was any contact at all between ISI and my brother, nor with Garth Ramsey (who did not even have any involvement in Independent Insurance at the time of the alleged contactj.The article in The Times, and therefore in your newspaper too, is based on a fallacy. Had a warning about Michael Bright been received by Noble & Co at the outset, it would have contrasted favourable reports on him from other sources.The major venture capitalists who invested (3i, Foreign & Colonial Ventures, etc) also did their own extensive checks on Michael Bright and decided to invest.
Noble & Co’s involvement with Independent Insurance continued until just after its stock market flotation in 1993, or 8 years before its insolvency. The stock market flotation was sponsored by us together with Lazard Bros, whose managing director Michael Baughan later joined the board of Independent and continued as such up to its insolvency. Does that mean you should write a similar article about
him? The brokers to the flotation were James Capel, while KPMG provided a full accountants’ report and R.Watson & Sons provided a full actuarial report. In other words, Independent was launched on the Stock Market in fine shape and passed rigorous tests from top names in the City. Its problems occured later, long after Noble & Co ceased to have an involvement.
For the record, my brother left Noble Grossart in 1973. He and I set up Noble & Co in 1980.1 took over from him as chairman of the group (Noble Group) when he retired in 2000 and set up Sir lain Noble & Partners as his own personal consultacy business.
The rest of the article in your July issue is perhaps best described as “colourful”. It contains a number of errors of fact, both minor ones and more major ones.Above all, the author could not in any way be accused of creating a balanced article about my brother. However, having been personally described as “amiable”, I suppose it is not my role to make critical comments!
An apology for the author’s critical comments about Noble & Co would nevertheless be welcomed.
Yours sincerely
Tim Noble
Chairman, Noble & Co

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